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dalvyx [7]
3 years ago
12

Jarvis is a coffee farmer who wants to hedge his entire coffee crop that will be harvested by September. The December coffee con

tract (which consists of 37,500 pounds of coffee) is trading at $2.00 per pound, which the farmer views as a profitable price. To hedge the entire crop, which is expected to weigh 150,000 pounds, at the best price, Jarvis should:
Business
1 answer:
aleksandr82 [10.1K]3 years ago
6 0

Answer: Sell four December coffee future contracts at $2.00 per pound

Explanation:

Based on the scenario in the question, the number of contracts that is required for hedging the entire crop will be gotten by dividing the total number of crops by the pounds that are available in one contract. This will be:

= 150,000/37,500

= 4 contracts

Therefore, the answer will be for Jarvis to sell four December coffee future contracts at $2.00 per pound

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Harwell Company manufactures automobile tires. On July 15, 2021, the company sold 1,400 tires to the Nixon Car Company for $55 e
Lunna [17]

Answer:

Dr Accounts receivable  $77,000

Cr Sales                                          $77,000

Payment within discount period:

Dr Cash                            $75,460

Dr Discount allowed         $1540

Cr  Accounts receivable                $77,000

When payment is not made within discount period, the necessary entries would be:

Dr Accounts receivable  $77,000

Cr Sales                                          $77,000

Payment within discount period:

Dr Cash                            $77,000

Cr  Accounts receivable                $77,000

Explanation:

Upon sales on July 15 ,2021 the total sales value of $77,000 ($55*1400) is credited sales account and debited to account receivables.

Collection of cash on July 23 ,2021 implies that the payment was collected within the discount period,hence the amount received is selling price less 2% discount, and as a result cash collected is $75460  ($77000*98%)

When payment is made on August 15, no discount is given has discount period has lapsed.

3 0
3 years ago
A company incurred the following costs associated with the purchase of a piece of land that it will use to re-build an office bu
elena55 [62]

Answer:

Cost of land= 564,500

Explanation:

Cost of land = Purchase price - Salvage + Demolition cost + Land preparation

= 540,000 - 22,000 + 39,000 + 7,500

= 564,500

5 0
3 years ago
Other dividend policy issues
umka2103 [35]

Answer:

1.

<u>Net income increases</u><em>. - </em>Ability to pay Dividends increases.

Dividends are paid from Retained Earnings which are derived from Net Income. If Net income increases therefore, so does the ability to pay Dividends.

<u>More profitable investment opportunities are available</u> - Decreases Ability to pay Dividends.

If there are more profitable opportunities for investment available, the business will invest in those opportunities. By doing so they will reduce the amount of cash that they have which is cash that could have been paid as dividends.

<u>The firm increases its debt ratio</u>. - Ability to pay Dividends Increase

As a result of the company borrowing more money, there will be more money left to pay out dividends so more dividends will be paid.

2. A. Despite the fact that Dernham Burnham Inc.'s earnings tend to fluctuate from year to year, the company most likely pays a predictable, stable dividend each year.

Companies like Dernham that aim to please investors usually adopt a predictable, stable dividend policy every year so that the investors will have more faith in them and be sure of earnings every year. This will give them a higher rating with the investors.

4 0
3 years ago
On January 15, 2017, Vern purchased the rights to a mineral interest for $3,500,000. At that time it was estimated that the reco
Dominik [7]

Answer:

Vern's depletion deduction is  $175000

Explanation:

given data

mineral interest = $3,500,000

recoverable units = 500,000

mined = 40,000 units

sold = 25,000 units

depletion rate = 22%

to find out

Vern's depletion deduction

solution

we get here depletion expense that is

depletion expense = \frac{cost - salvage\ value}{estimate\ no\ units} * number\ of\ unit\ extracted      ...........................1

put here value we get

depletion expense = \frac{3500000 - 0}{500000} * 25000  

depletion expense = $175000

and

percentage depletion = $800,000 × 22%

percentage depletion = $176000

we know that % depletion method is not accept as IRS for certain natural resources

so we use depletion method is use here

Vern's depletion deduction is  $175000

4 0
3 years ago
The ___________ remains the most important consumer buying organization in american society and has been researched extensively.
Elanso [62]
The family remains the most important consumer buying organization american society and has been researched extensively. Hope this helps, good luck.
4 0
3 years ago
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